Jerusalem: In the largest protest in Israel's history, more than 400,000 people hit the streets in cities across the country against the rising cost of living, calling for a ‘million-man march’ towards bringing sweeping economic reforms.

Media reports across Israel estimated that more than 400,000 people participated in the nationwide stir last night, by far the largest since the wave of protests began two months ago, with Tel Aviv, the nerve centre of the demonstrations, alone recording participation of more than 300,000.

What began as a tent encampment in Tel Aviv to protest rising housing costs has mushroomed into a national grass-roots movement for social justice and more equitable distribution of wealth.

Protest leader Yonatan Levy said the atmosphere was like ‘a second Independence Day’.

Though the government doesn't face an immediate threat of being dislodged but the waves of protests during the last two months has underscored the potential electoral impact of a burdened middle class rallying under a banner of ‘social justice’.

"Mr Prime Minister, the new Israelis have a dream and it is simple- to weave the story of our lives into Israel. We expect you to let us live in this country. The new Israelis will not give up. They demand change and will not stop until real solutions come," Protest leaders Daphni Leef and National Student Union Chairman Itzik Shmuli said, addressing the Tel Aviv crowd.

"They tried to dismiss us as stupid children, and as extreme leftists, but last night's countrywide protest proved otherwise," Leef said.

In Jerusalem, an unprecedented 50,000 people filled Paris Square, near Prime Minister Benjamin Netanyahu's residence, and the surrounding streets, almost twice the number that attended previous protests this summer.

Toddlers sitting on shoulders blew plastic trumpets, teenagers in youth movement shirts danced and sang ‘My Bibi has three apartments’ to the tune of ‘Haman's Hat Has Three Corners,’ and die-hard activists waved their well-worn signs as thousands thronged through the King George Street.

"I am not amused that there are hungry children here, that we have a soldier rotting in captivity for five years, that Israel is one of the poorest examples there are of human rights," actress Orna Banai told the crowd.

Chairman of the Hebrew University Student Union, Itai Gotler, said, "We changed this summer. The voice of the mother, the teacher, the student, have been heard... The fire of protest was lit in Tel Aviv, but the tent city in Jerusalem shows that the protest belongs to all of us."

Bowing to the protesters' demand, Netanyabu last month announced the appointment of a committee of experts to propose social-economic reforms.

The team is being headed by Harvard-educated Professor Manuel Tranchtenberg, Chairman of the Planning and Budgeting Committee of the Council for Higher Education, and also includes academics and experts from the private sector.

The team will focus on lowering the costs of living, limiting monopolies, reducing indirect taxes, tackling the bureaucracy in the housing market and putting into effect the national housing committees law.

Many local analysts have lauded the protests as signs of ‘real democracy at work’ and ‘a new independence for Israel’.